Fitch
Ratings says in its latest Global Housing and Mortgage report that while the
rate of home price increases is likely to slow in 2017, continuing government
macro-prudential efforts to dampen unsustainably rapid price rises, such as
mortgage lending restrictions, are being overpowered by a fundamental excess
demand for home purchases.

"Home purchases in many countries continue to
become increasingly expensive relative to household income and rents, driven by
the combination of extremely low borrowing costs, readily available credit,
steady economic growth and limited housing supply. These conditions look set to
remain in place this year," said Andrew Currie, Managing Director,
Structured Finance, Fitch.

Fitch has a Stable or Stable/Positive outlook for
the housing and mortgage markets for 19 of the 22 countries covered by the
report. Despite this, unsustainably rapid price rises in some countries such as
New Zealand, Norway and Canada are expected to moderate in 2017.

For the first time, Fitch's report covers China's
housing market, where home prices in China's largest cities rose by 25% in 2016
and Fitch predicts the outstanding mortgage balance in 2017 will be more than
three times higher than the 2012 volume. However, in contrast to many markets,
Chinese authorities directly control many aspects of housing and mortgage
markets. As a result, Fitch expects 2017 price rises of only 2.5% in the
largest cities, partly in response to tougher rules on home purchase and
minimum loan deposits.

In North America, US home prices and delinquencies
are back at 2006 levels, a decade after the subprime crisis began. Loans
originated post-crisis maintain their strong performance and prices are
supported by fundamentals, although some sub-markets are overheated. In Canada,
household debt, reached a new high of almost 168% of disposable income in 2Q16
and, for the first time, breached 100% of GDP and is higher than the UK and US
household debt burden.

There are only four markets covered by the report
experiencing falling home prices and in Europe the legacy of the financial
crisis continues to fade. Italian home prices are expected to stabilise after
years of declines, leaving Greece as the only European country with falling
prices. In the UK, Brexit-related uncertainty and stretched home purchase
affordability will halt UK home price rises in 2017.